A SMSF, or self managed super fund, can have anything from one to four members at the most. It is the members or a company that one or more members direct that become trustees of the SMSF, but regardless of who the trustees are, each member of the SMSF collectively pools resources and votes on every decision that needs to be made. The members all have a common interest and goal to achieve and therefore share their knowledge for the success of all involved.
The goal is for each member to receive funds upon their retirement, but because it is a possibility they might perish in the interim, the members appoint identifiable beneficiaries that will receive the funds instead.
All members are considered members for life, or until the retirement funds pay out, which means it is not simple to remove any particular member from a SMSF, but superannuation law does permit it. It should be clearly outlined in the trust deed as to what conditions, and under what circumstances, a member can be removed. Certain cases such as the member being paid out, assets being transferred out of the trust and any funds ceasing to be payable to any member are conditions where a member can be removed.
Can You Have a Single Member?
While the members of a SMSF are typically a group of family members or friends, it is possible to have a single member SMSF. In this case, the member must act as trustee alongside another trustee who must be a family member or an individual who does not employ the single member. A single member SMSF can also have a corporate trustee and, in this case, the member must be the sole director of the company appointed or one of two directors where the other individual is either a family member or an individual who does not employ the single member of the trust. These are conditions laid out by the SIS Act for which a single member SMSF must comply with.
Conditions of the SIS Act for SMSFs that have more than one member stipulate that there cannot be more than four members, all trustees appointed must be members, or if a corporate trustee is appointed then the members must be directors of this company. Members can only be employed by another member if that member is a family relation.
When it comes to members who are legally disabled, and this includes anyone under 18 years, another individual must act as trustee on their behalf, as they are unable to. This can be a legally appointed representative, a parent or a guardian. If the legally disabled member is represented by a corporate trustee, the company must be directed by the legally appointed representative, the parent or the guardian.
If a corporate trustee is appointed, it is the members that establish the SMSF, but it is possible for an entity to establish it too as long as the entity is not the corporate trustee.